DAR-ES SALAAM, Tanzania, October 16, 2002—The
International Finance Corporation (IFC) has advised the Government of Tanzania
in the privatization of Air Tanzania Corporation (ATC), the national airline.
On September 19, 2002, South African Airways (SAA) submitted a technical
and financial offer for the purchase of 49 percent of the shares in Air
Tanzania Company Limited (ATCL), a new company created to hold the core
assets of ATC. On the same day, two other potential bidders, Kenya
Airways and Nationwide of South Africa, submitted letters declining to
bid, but stating their continued willingness to work with the Government
of Tanzania on the formation of a regional airline, or some other form
Following an evaluation of SAA’s technical offer, their sealed financial
envelope was opened, on September 24, 2002. SAA submitted a binding
offer of a total of US$20 million; of which $10 million would be paid in
cash to the Government; plus a $10 million capital injection into ATCL.
In its business plan, SAA stated that one of its core objectives
is to develop Dar-es Salaam into a hub for regional and intercontinental
air traffic. The offer has been formally accepted by the Government
of Tanzania, and financial closing is expected before the end of November.
Brian Samuel, Principal Investment Officer in the Private Sector Advisory
Services (PSAS) group, expressed satisfaction with the outcome. “A
high level of competition and transparency had been maintained throughout
the process, with good results for the Government and people of Tanzania,”
he said. “SAA is the largest airline in Africa; with extensive training
and technical support facilities; and is an excellent strategic partner
for ATCL.” Samuel added that it is particularly satisfying was that
the transaction was carried out under a fully liberalized and competitive
market structure, which should bring tangible benefits in terms of the
quality and cost of air transport services to and within Tanzania.
This project was supported by a Technical Assistance grant from Denmark
that assessed the strategic and operational performance prospects of Air
Tanzania Corp as input to the options and prospects for privatization.
In addition, through IFC’s own Technical Assistance resources grant
funding was provided to augment management processes, and implement specific
initiatives required to reduce operating costs. Additional bilateral
grant resources were provided by the UK Department for International Development
to enable the Tanzanian Privatization Agency to engage legal advice needed
for the privatization to move forward.
IFC’s mission is to promote sustainable private sector investment in developing
countries, helping to reduce poverty and improve people’s lives. IFC
finances private sector investments in the developing world, mobilizes
capital in the international financial markets, and provides technical
assistance and advice to governments and businesses. Since its founding
in 1956 through FY02, IFC has committed more than $34 billion of its own
funds and arranged $21 billion in syndications for 2,825 companies in 140
developing countries. IFC’s worldwide committed portfolio as of
FY02 was $15.1 billion for its own account and $6.5 billion held for participants
in loan syndications.